Good, if painful, signal from New MySpace Leadership

Today announcements of sharp people cuts at MySpace hit and hit hard.  This is a painful step, and my sympathies go out to any employee impacted.  I take no pleasure or glee in poking fun at this.  I’m sure that in the coming days, plenty of press will focus on more salacious elements of the moves, the pain inside MySpace, whether offices are remaining open, etc.  The story of growing so quickly, getting bought by News Corporation, followed by the rapid flattening of growth–all within the span of a few years–is just too much of a story to pass up for many.

That’s not my focus.  Instead, I’d like to write and applaud Owen Van Natta and his exec team for moving quickly to cut down while they try to figure out what to do.  In a post I wrote upon the announcement of Mr. Van Natta’s appointment to the role, I suggested that I’d be watching for 3 things–(1) a focus on scenarios, (2) execution, and (3) any cultural phenomenon starting in MySpace versus the other tools (Twit, FBK, etc.).  Given that it’s been less than one month, I’d say that taking the step of cutting back this fast and this hard is an example of execution.  It’s a painful sign, but a good one. I’d not expected such decisiveness here to be honest.

I think this is a good move, not just because it helps signal an execution focus.  I think it also helps the team that remains get hunkered down to figure out what the heck they’re actually going to go do.  The features and scenarios that might help them get ahead are not ones that should take tons of people.  Instead, they need a tight focus with highly motivated superstars–hard to do that when you’ve got wave after wave of layoffs.  Better to just get the cut done big and fast.  So kudos to the leaders of MySpace for having the courage to get after this fast.

MySpace still has miles to go before it sleeps.  But I’d say that this is on the whole a good sign, and I’ll be interested to see what’s next with them.

Filed under: business, social media , MySpace, News Corporation, Social network

I’d listen to Jon Stewart before Chris Anderson on fixing media’s business model

Image via Wikipedia

TechCrunch summarizes Wired Editor-in-Chief Chris Anderson’s rules for pricing on online media by calling them “counterintuitive.”  Author Erick Schoenfeld, writes that Mr. Anderson “articulated something that is now increasingly becoming obvious: As products go digital, their marginal cost goes to zero.”

“This is the law of gravity online,” says Anderson. “Everything that becomes digital will become free. There will be a free version, either you will be competing with free or giving it away for free and selling something else. If it is not zero today, it will be zero tomorrow.”

He then goes on to summarize Anderson’s new “rules”, which appear to be:

1. The best model is a mix of free and paid
2. You can’t charge for an exclusive that will be repeated elsewhere,
3. Don’t charge for the most popular content on your site,
4. Content behind a pay wall should appeal to niches, the narrower the niche the better

I’m scratching my head a bit here, and I’d love to have read more evidence of this actually working at mass scale. There are a bunch of counter-examples that a hard-headed business guy like me might push back on here with a hearty WTF.   First off, some counterexamples.

The best model is a mix of 100% pay / 0% free, like World of Warcraft.  It’s media IMHO, you want onto their servers, you pay to be there.

Any packaged software (or pharmaceutical for that matter) has a marginal cost of zero, it is still for pay.  I reject the idea that media–becuase its marginal cost is zero–cannot be for pay.  Plenty of other high-value products have zero marginal costs and extract high prices.  Linux and Windows have been two versions of digital OSs for more than 10 years.  Windows still has the vast, vast majority of revenue and unit share.

Plenty of authors are finding opportunities to charge for their content–especially in the financial sector. Jeremy Siegel for example.

Finally, nowhere do I hear that the core model of big media brand (e.g., WSJ) and all its writers are needed to do what they do.  I love the WSJ, and this stinks to write.  But the net net is that most news will be covered by more citizen-oriented news outlets by  citizen journalists and niches that are running around snapping Twitpics and posting to blogs.  This will mean that vastly smaller newsrooms are going to be needed to do what they do today.  Some will be needed and some are crucial.  But many will be continuing to compete with free.  Very hard to deal with.  This needs to get teed up and discussed.  Openly.

With that out of the way, now I want to explain why I think this talk is off base with respect to big media.  Brands such as the WSJ, Wired, Time, Newsweek do have a well-known problem–they’ve got a bunch of folks in a priesthood of journalism competing with their congregation of citizen bloggers, twitterers and so forth who are happily, ignobly disrupting the stuffing out of them.

Anderson’s prescription may work for them, but I’m extremely dubious.  I think that the congregation of citizens is going to disrupt all the slices of profit from the priesthood of jounralists.  While I might pay a few bucks for virtual currency on Zynga or a special hat on WeeWorld, I’m not going to pay $0.99 for an article that I can just read somewhere else.

I really think that we’re watching in journalism what we saw in the auto makers a few years ago.  We are looking at an industry that doesn’t realize its dead yet.   The business model needs far more dramatic reinvention in terms of what we’ll consume.  That debate ain’t happening though.  Instead, what we’re hearing is that the pricing model needs to go this long tail route, which is a baby step.  They’re using a pea shooter against an elephant on this.

As an example of how radical things need to get, here’s Jon Stewart talking to Katie Couric about what the TV news should do.  His ideas are closer to what I think needs to happen than working on a long-tail price model.

Jon Stewart Interviews Katie Couric

Here Stewart gives Couric all kinds of crazy suggestions–”free colonoscopy for viewers,” etc.  These get laughs, but he’s basically right.  Old media is going to need things like cage-matched talking heads debating health care pay-per-view, manage Wolf Blitzer’s as a multi-medai franchise similar to Tom Petty, and a bunch of other completely crazy ideas.

The idea that a pricing model as suggested is going to do the trick is in my mind, extremely short-sighted and likely to fail.  Media franchises will need to think radically about trying vastly new and different things, else they’ll be in the same spot GM / Chrysler are in now.

Jon Stewart’s become one of the most trusted ‘newsmen’ in the US, crazily.  His ideas on how to fix big media may make him the smartest business person too!

Filed under: business, marketing, social media, technology , Chris Anderson, jon stewart, media, Pricing

Facebook’s Vanity URLs’ impact: web-based mail will be the big loser

Image via CrunchBase

Like hundreds of thousands of others apparently, I grabbed a vanity URL On Facebook Friday night.  (I’m www.facebook.com/jay.jamison.) As it was all the rage in the geekosphere, I was aware it was happening.  As the Penguins had just won Game 7 and their 3rd Stanley Cup, I was at home, happy, and ready to jump onto Facebook and grab my URL.

The experience was no fuss and quick.  I was surprised in that sense, as I’d expected to have long queues as Facebooks servers melted with everyone trying to get their URL.  Didn’t happen–the whole thing took about 30 seconds.

So after grabbing my URL, I then finally gave some thought as to what was so important or not about these “Vanity URLs.”  Some, like Om Malik, speculate that it may take a bite out of Twitter’s growth.  I disagree with Om on this–I think the nature of the conversations and interaction in Twitter is fundamentally different than Facebook.  Having Vanity URLs might make groups of friends on FBK have more Twitter-y like conversations, I suppose.  But as a user of both services, I still see them as fundamentally different.  Facebook’s a place where I share with friends updates, thoughts, photos, etc. on a range of topics.  Twitter is in a sense more universal–it’s like a user-generated teletype news feed with people I know and those I don’t.  Vanity URLs don’t really change that for FBK, @replies won’t do all that much either, as my circle of friends already kind of do this in a klugey way in conversations on FBK.

So I don’t see this as a shot across Twitter’s bow, really.  Instead, I think this is more about making it easy for Facebook to grab and secure the next genertion of users.  What I mean here is that I expect that web-based email is going to feel the brunt of this move.  If you’re 13 say, and starting to use computers more deeply, why are you really going to need web mail now?  You aren’t.  You just grab your little Vanity URL, and you tell the world you’re www.facebook.com/your.name.  I’d think the groups more directly impacted in the short term are not Twitter, but gmail, hotmail, aol im, etc.

Filed under: Twitter, business, social media, technology , Facebook, Social Networking, Twitter, Vanity URL

Working with VCs part 2: reverse due diligence

Earlier this week, I posted part 1 of a currently 2 part series on working with VCs.  As I mentioned there, and as I’ll repeat basically any chance I get: working with venture capitalists isn’t summer camp.  It shouldn’t be.  My personal experience and view is mixed–I’ve had great experiences and some bowsers.  But as I’m generally an optimistm, my basic view is that you’re served best by approaching the relationship with a well-grounded, objective perspective.  Again, this is business, not summer camp; you should know this as the venture capitalists with whom you might work certainly know this.  Not a ding on them, just the reality that you and they should share.

Alright so this post is about tips and tricks to drive reverse due diligence.  In other words, these are the questions and steps to take if you actually get a venture capitalist involved and you want to research whether they’re worth partnering with in building a company.  Feel free to suggest other ideas in comments.  FWIW, these are my concrete ideas and steps.

First, probably the #1 most useful data point would be a VC working with repeat entrepreneurs who’ve had sizeable exits in the past.  Founders who’ve achieved exits previously are the “A-Listers” of the Silicon Valley star system.  The Max Levchin’s or Kevin Rose’s are the Tom Cruises or Tom Hanks of Silicon Valley.   To a degree, they have a choice in working with the VCs they want to work with.  A successful founder who chooses to work with the same VC again is a signal that that VC is solid.  (Otherwise, why would the founder keep working with the person?)  Ask the VC which founders he’s currently working with, and research their track records on this specific dimension.  I’ve met and gotten to know a few VCs who can point to successful rockstar founders who continue working with them–these VCs are the guys you want to work with before anyone else.

Second, find out if the VC on your deal is working with founders on a repeat basis who did not have an exit.  Very similar to the above, except with founders who didn’t exit.  This is somewhat interesting, in that it conveys that both parties still think enough of each other to work together again.  There’s a slight flag here that you should check out, but in generla I’d interpret this as a positive.

Third, ask the venture capitalist to get intros to the founders he’s working with currently, and call them up.  Ideally you meet these folks in person, and you really get them speaking frankly.  This can be easier said than done, but you’ve got to do this. Here are the questions I’d ask them:

• Please describe your experience with them in depth.
• What is the best thing that has occurred in this experience. (This should be concrete.)
• What is the worst thing that’s happened.  (This should be concrete. )
• If you were to have a successful exit and you could work with anyone, would you work with this person again?
• What is the biggest and most significant impact this person ahs made on your business?

The purpose here is not to drive a gotcha type conversation.  You are just trying to get information as clearly as you can on the pros and cons of this specific VC.  I consider this must do work.  What I’m providing here is just a basic set of guidelines.  For your speicifc business, there will be a whole host of individualized issues that you need to drill in on.  The point isn’t so much that there’s a single list; its that you’ve got to go through it.

I’ll probably add more to this list as I mull, but here I thought I’d take the approach of getting this out there and then adding as I think further about it.  Comments welcome.

Filed under: business, entrepreneurship, free stuff for startups, venture capital , due diligence, entrepreneurship, Startups, venture capital

My Founder’s Institute Talk on Branding & Naming Your Startup

Last week, I had the pleasure of speaking as a Mentor at Adeo Ressi’s TheFunded’s Founder’s Institute with entrepreneurial superstars James Hong and Bryan Thatcher.  

First off, before I get into the topic, let me say that I think the TheFunded Founder’s Institute is innovating the approach to startups in an important way.  The approach is a mix of company building philosophies.  It’s one part bigger hammer–that is bring in lots of smart people as founders.  It’s also another part strong social networks, connect those founders to each other and to experienced, proven entrepreneurs.  Add top-tier, discounted, startup services (legal, accounting, etc.) and that gets at crux of the approach.  The new stock class—F-Class—which Ressi’s introduced is also super interesting.

There are a lot more unique details to how Ressi’s going about this, which I’ll not go into here.  But suffice to say, it is both empowering for entrepreneurs and it has a bunch of detailed thought behind it.  Ressi’s vision is big and broad.  It is exciting to be a part of, and I’m eager to help it succeed.   More concretely, I wish I had had access to such a thing when I was trying to start out as an entrepreneur.

Ok, so that’s the Founder’s Institute, now onto what I was talking about when James, Bryan and I spoke last week.  Our topic was Naming—as in, you’ve now figured out what customer problem you think you’re solving and what you want to do, now what do you call this thing?

This is a fantastically rich and interesting topic.  It’s also, IMHO, super super important.  When you’re a startup, your name is about the only marketing you really have at first.  Also, everyone—customers, potential employees, and potential investors—will ask you about your company’s name.  So whatever you name and brand your company had better be good.

My slides from the presentation are embedded here (hat tip to the folks at Igor International, who’s free naming guide was very influential):

(Shared with permission from TheFunded Founder’s Institute.)

It was a good discussion, and my sense is that this provides a useful prescription for startups thinking about what to name their company and how to approach their brands.  Some key points for reinforcement.

Having a process for naming helps.  What I think is particularly useful about this approach is that you can put numerical scores next to how you think about names.  This enables you and your team to have a concrete discussion about why someone likes versus dislikes a certain name.  This is important, as it enables your team to come to a more objective decision, as opposed to just who yells loudest.

Think BIG picture first, then worry about finding the .com or URL that’ll work. Following my talk, one common theme in speaking with people afterwards is that I think many people get hung up on the challenge of finding a good .COM URL that’s not already been picked up.  While certainly a challenge, I think that worrying about this tends to drive entrepreneurs to small thinking.  You’ll have to work through it, but that’s an end point, not the beginning.

As I’ve said in other posts—as an entrepreneur, my advice to other entrepreneurs is to think big in everything you do.  So when it comes to naming and branding your company, think big.  Go for a big name, figure out what that makes sense and helps position you strongly relative to your potential competitors.  Figure out a name that really delivers on the strategy that you’ve put in place.  Get that strategy right and solid.  Then you can go and figure out the more tactical issues of what the URL hunting strategy needs to be.

Commit to going through the process.  The other thing that I’d encourage people to do is really commit to going through the process that I’ve described in the PPT deck.  I’ve met with several companies over the past year who’ve listened to this process, ignored it, and then have ended up hiring a naming consultant to basically help them go through the same thing.

Acknowledgments to the folks at Igor International. Igor International have open sourced their naming guide, which is a great thing.  My deck basically walks through how I used that free information to secure Moonshoot, an awesome brand name, IMHO .  The tool Igor’s provided is for frugal founders like us a tool to go figure this out on our own.  Invest the time to commit to doing it.

Filed under: business, entrepreneurship, free stuff for startups, internet, marketing, technology , Branding, entrepreneurship, Founder's Institute, marketing, Naming, Start-ups, Startups

Quick take on Microsoft’s Bond Offering

Image by Getty Images via Daylife

Yesterday saw Microsoft making a historic first time bond offering.  While a first for the company, the $3.75B issue is relatively small.  Indeed, it’s not like they’ll buy Yahoo or SAP with that money. 

My own take is that there’s not much to see here—rational, low-risk, imminently sensible.  (Which no matter what else anyone might say about Microsoft, it has *always* managed its finances extremely well.)  From Microsoft’s point of view, it’s cheap money, about as cheap as they can get (aside of course from continuing to pull in free cashflow at $1B/month).  With the equity markets still poor, MSFT is under $20 currently, its blue chip stock doesn’t have the same power it did.  Might as well take their long-term debt: equity ratio to roughly 0.1, roughly a quarter of ORCLs. 

I’d not be at all surprised to see MSFT announce a non-trivial buyback of stock, particularly post Office 2010 beta, and as W7 launch nears.  The message will likely be to the market and to enterprise customers that a new wave of the desktop / netbook is upon us with high quality, on time releases from Microsoft.

Filed under: business, investing, technology , Microsoft, technology

Who I’d bet against if Twitter were sold

Image via Wikipedia

This post is inspired by Warren Buffett.  Buffett often talks about how with new technology it’s impossible to pick the winners, but it’s obvious who to short.  He uses the example of the thousands of automobile companies formed in the US over a century ago, fewer than 4 remained a few decades later.  At the start of the auto industry you’d have no idea which 4 car companies to bet on, but you probably should have known to short horses.  Same thing here. 

Speculation continues to mount that Twitter is in acquisition talks with tech analysts and journalists writing about what firms as Apple, Google, Microsoft, and News Corp should or must do.

I wouldn’t put money on who might win or even if Twitter wants to do a deal—there are too many moving parts to read this, as I mentioned yesterday.  If I had to bet, I’d probably say that the most likely 2 scenarios are that that Twitter doesn’t sell or that MSFT acquires them.  The second most likely would be for News to buy them.

If Twitter does indeed sell to MSFT (or rather, anyone but News), then I think there are some obvious bet against that I’d make.  Namely, Twitter clients—e.g., Tweetdeck and Seesmic.  Perhaps others, but those two in particular would I think have a very hard to reach mainstream distribution against someone like MSFT or Google.  One of the challenges with building desktop apps I suppose. 

 

 

Filed under: business, internet, social media, technology , business, social media, Twitter

Let the Twitter Sniff-fest Begin!

Last night I went to bed shortly after reading that Apple was trying to buy Twitter.  This morning, that bid got raised with reports that MSFT, GOOG, NEWS as well as Apple are all in the hunt. 

See: Apple, Microsoft, Google And News Corp Are All Sniffing Around Twitter (AAPL, MSFT, GOOG, NWS)

Twitter may well decide not to sell.  And while I don’t have time now to get into, if Twitter decides it wants to sell, Sweet Maria, what a bidding fest we will see. 

Each suitor is an 800# Gorilla, each with solid strategic interests and potential synergies to bring.  My quick take:

• For Apple, it takes the iPhone to a new level of potential communication / app platform
• For MSFT, I see the desktop having a sidebar twitter stream integrated right in—also helps it with mobile and with internet.
• Goog—Twitter represents that biggest best grab on the real-time info flow.
• News—well, Twitter’s all about the future of news. 

No idea what will happen, but Twitter’s sitting about as prettily as can be.  Very interesting to watch

Also, what happens here will be a signal as to where we are in the context of M&A / IPO in technology. 

Image by jacqueline-w via Flickr

Filed under: business, internet, technology , M&A, Twitter

Stackoverflow & MySpace : A study in (stark) contrasts

Two posts over the last 24 hours caught my eye due to the stark contrasts between them.  Imagine you knew nothing about the two companies, just had the video below on StackOverflow or the TechCrunch article on MySpace—which one would you be betting is ramping up on momentum, and which one is basically without clear direction? 

The moral of this story is very simple: companies that articulate concrete, useful end-user scenarios do well; those that don’t struggle. 

Case 1: user-scenario centric.  Joel Spolsky gave a talk at Google’s campus on StackOverflow.com “a free question and answer site built by developers for developers that has fostered a strong and committed online community in under one year.”   

It’s an informative talk, embedded below.  I could happily recommend it to any entrepreneur, as it is does such an effective job walking through the problem Joel saw, the competitive landscape, and how his team worked on StackOverflow as a solution.  It made me interested enough to go to the site and play around – even though I have nearly zero business being on a site for developers. 

 

Contrast this with TechCrunch’s article Former MySpace Chairman Richard Rosenblatt’s Advice To The New Executive Team.  While Rosenblatt goes to lengths to describe why he is hesitant to give advice, he then dispenses with “general thoughts on where MySpace can push forward.”  (BTW, don’t you love how people say they don’t want to give advice, and then they do so?!?)

Anyway, Rosenblatt’s advice is admittedly high level, and that’s probably the right tone.  Still, Mr. Rosenblatt’s core thrusts are pretty lame, even for general advice.  His list:

• Own the spaces that only MySpace can
• Transform your unique UGC into marketable media
• Listen to the community and let them guide YOU

Nowhere in his article is there one mention of a single user scenario that is at all interesting to me as a user and consumer of social media.  Yikes.  I get that its not his place to offer “operational” advice.  But still, when someone who’s been affiliated closely with a company, as Mr. Rosneblatt has, and they cannot articulate a single user scenario, then that to me is a sign of real trouble. 

I’m a Rupert Murdoch fan, mainly because he’s built such an amazing track record, and he’s singularly unbowed by the troubles his industry faces.  I’m hopeful that his team at MySpace will hit the ground running and create fantastically interesting end user scenarios that would get me and others interested and involved in the franchise that they’ve created. 

 

 

Filed under: business, entrepreneurship, social media, technology , MySpace, stackoverflow.com, technology

Pro-Profit for Antiviral Drugs: A critique of NPR’s goofy coverage on flu vaccines

Yesterday I found myself listening to NPR’s Morning Edition and its coverage of swine flu.  This story, Antiviral Drugs Discounted For Government : NPR, discussed the deep discounts governments negotiate and the resulting shrunk revenue and profit streams that big makers Roche and GlaxoSmithKline make on these drugs. 

My sense of NPR’s tone was decidedly anti-profit, and I find this worrying.  In addition to a tone that discussed how drug makers were not on track to reap a “windfall” from this, the following quote struck me as emblematic of NPR’s anti-profit tone:

To be sure… other instituations will put in more orders.  And more orders, means more profits.

We should not be anti-profit on flu vaccines, we should be pro-profit.  

First off, the amount of money at stake is very small—for something so important, minimizing a pandemic is something I’m happy to see someone profit from.  According to NPR, Roche made $120M in revenue on its key flu fighting drugs, roughly 50% less than the New York Yankees’ 2009 Payroll.   I’d far rather see Roche making more on flu vaccines than the Yankees.  I’d have no problem with that. 

Second, more profit would mean more investment in the distribution, safety, and efficacy of these drugs.  I don’t buy that this is all optimized.  According to some experts cited in the NPR piece, they’d advocate not taking the potential swine flu vaccine this fall as its won’t be proven safe, a la the 1976 vaccine.  Also, the logistical challenges to getting these drugs built and distributed are quite large.  Though I can’t point to how the safety and logistical problems would be fixed with greater investment, I’m confident that with greater profits in the segment, greater investment would be in place, leading to better solutions here.

The capitalist system has taken a body blow over the last year.  That said, we need to remember that we shouldn’t cut off our nose to spite our face.  It is dangerous to put an interest in profit minimization ahead of a drive to maximizing public health.  I fear that if we continue demonizing profit-making entities,  and we continue to push organizations to minimize their profit motives, that we’ll put ourselves at more risk here and elsewhere.

 

Filed under: business, politics, technology , business, npr, swine flu